Fed Will Now Monetize The Most Recently Issued Agencies
• Zero HedgeThe Federal Reserve announced earlier a shift in its strategy in purchasing Agency debt, whereby it would purchase almost exclusively the most recently issued Agency paper: Prior to August 31, 2009, purchases were focused on off-the-run securities in that category. Going forward, purchases will include on-the-run securities in that category. This change represents a technical adjustment designed to mitigate market dislocations and to promote overall market functioning. Over the course of the program, the Federal Reserve may change the scope of purchasable securities. "Overall market function" is a wonderful euphemism for attaining a sufficiently high stock price for commercial banks so that when the FASB requires off-balance sheet items to be reincorporated on their respective balance sheets at the end of the year, we don't have another massive bank raid once every single emperor's clothes are proven to be non existent as Tier 1 Capital Ratios start collapsing l